Short Term Treasury ETFs In Spotlight After Election

November 16, 2016

  • SHY has a duration of 1.88 years, and a 30-day yield of 0.74%. When it comes to cost, SHY isn’t the cheapest, but it’s by far the most liquid. The fund trades on average more than $200 million a day at a 0.01% average spread. No other ETF in this segment comes even close. SHY has a 0.15% expense ratio, putting its total cost of ownership at about $16 per $10,000 invested.
     
  • The Schwab Short-Term US Treasury ETF (SCHO) has $1.26 billion in total assets—the second-largest fund in this segment—and a liquid option for investors, but nowhere near SHY’s levels. The fund trades about $10 million on average a day, with an average spread of 0.03%. With an expense ratio of 0.08%—the segment’s lowest—investors are shelling out about $11 per $10,000 invested to own and trade this ETF. SCHO has duration of 1.94 years for a 30-day yield of 0.78%.
     
  • The SPDR Bloomberg Barclays Short Term Treasury ETF (SST) has $151 million in assets. The fund costs 0.10% in expense ratio, but it struggles with thin trading volume of about $2 million on average a day, and wide trading spreads, averaging 0.14%. All in, this ETF is the costliest to own and trade in this segment, at about $24 per $10,000 invested, but it’s also this year’s best performer, as the chart below shows. SST has adjusted duration of 2.76 years for a 30-day yield of 0.95%.
     
  • The PIMCO 1-3 Year US Treasury Index ETF (TUZ) has $99 million in total assets—the smallest ETF in this segment. The fund’s liquidity is an issue, trading on average only about $2 million a day, with an average spread of 0.06%. With an expense ratio of 0.15%, TUZ costs investors about $21 per $10,000 invested, or nearly twice the price of SCHO. TUZ has duration of 1.84 years for a 30-day yield of 0.69%. 

Charts courtesy of StockCharts.com

Contact Cinthia Murphy at [email protected]

 

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